Asda and Sainsburys Enter New Price War

Mon, 14 May 2007
 
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Asda has revived its battle on low prices against rival supermarket chain J Sainsburys . The grocery retailer has reduced prices on over 2,500 store items, exceeding last year’s price cuts by 20 per cent.

Head of the supermarket group Andy Bond is expected to announce, in a quarterly trading update on Tuesday, that it is important to keep prices low due to the effects interest rates are having on customers .

He is also determined not to follow in the footsteps of rival companies by using organic, premium or healthy foods as an excuse to inflate margins and rip off customers, an insider at Asda said.

Asda has slashed prices on more than 7,000 items since the start of the year, with results starting to show.

The 12 weeks leading to April 22 saw Asda beat its rivals Tesco, Sainsbury's and Morrisons with year-on-year growth of 9.2 per cent, according to the latest data from TNS. The positive figures for Asda were achieved despite the best growth rates for three years being recorded at Sainsbury’s.

US owners Wal-Mart announced that Asda had made a significant contribution and customer-focused initiatives were helping to bring in customers and speed-up sales in food and other departments.

According to City analysts, Sainsbury’s is expecting to burst Asda’s bubble by delivering huge full-year pre-tax profits of £369 million, up from last year’s figure of £267 million.

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